Dear Monty: Homebuyer finds foundation problem after closing

Richard MontgomeryMore Content Now

Tuesday

Dec 4, 2018 at 6:00 AM

Reader Question: We bought a 100-plus year-old home. Tenants occupied it at the time of purchase. It is our first house. It has a stone wall foundation and wooden beams supported by screw jacks. An addition has a concrete block foundation. The home inspection called for repairs, notably some improved ventilation, better drainage, correct water penetration, and rotted siding around the base, but no mention of any foundation issues. Our buyer-agent helped us obtain a concession for $2,000 at closing.

We have discovered the water penetration has wholly rotted the sill plate and the ends of the floor joists. Some "remodeling," from two owners back, about 10-15 years ago was shoddy and superficial. When we first saw the house, the walls were so uneven that I thought they were plaster and lathe. They were just very poorly done drywall. I can see the joint tape and old fasteners everywhere under the paint. Everything in this remodel appears to be built from scrap materials. The seller lived in the home earlier and did not disclose anything about this. The closest we got was a receipt for some foundation work that had been done on the house several years ago. None of the floors are level, and just about every room is a few inches above or below another. Our agent never suggested that it might be indicative of broader structural issues. I have to disclose all these problems if I want to sell. My questions are: Do we have any recourse here? Can an earlier owner still be responsible? What about the inspector and appraiser? Are we underwater?

Monty's Answer: Before addressing your questions there are some general impressions garnered from your story where some commentary may help you going forward. The price point was not shared in your story but could change the complexion of the severity of the problem. For example, if the purchase price was $89,900, one may wonder if your expectations were unrealistic. A $600,000 purchase could change the paradigm.

Your use of building terminology conveys a message from a person who is familiar with construction. Words like sill plate, screw jacks, plaster, lathe and floor joists are words found in a contractor's vernacular. An observer could construe those words as the words of a person somewhat familiar with construction.

If I understand the timing, you saw uneven walls, screw jacks and uneven floors when you looked at the home and you were made aware of rotted siding, water penetration and earlier foundation work, yet you went forward regardless. Seeing or learning of these clues should have raised red flags and motivated you to gather additional data.

Considering these impressions could lead one to question whether you were aware of the issues but went ahead and only after beginning the work realized there was more than you bargained for and now you want recourse.

Unanswered question

Was there a seller condition report? Most states require sellers to complete a detailed description of the condition of the property. Such a document could help you if the seller declared there was no problem with the foundation and you had evidence that the seller knew to the contrary.

You will have to do some sleuthing to see if you can uncover evidence that demonstrates the seller had such knowledge. The receipt from the foundation contractor that made repairs earlier may help. Neighbors that live close to your home may have observed a contractor working there or recall the owner complaining about the foundation. The tenant that moved out before you moved in may have complained to the owner.

Recourse

You must fund preparation for recourse. A structural engineer should be consulted to determine the severity of the foundation's condition and to what extent repairs are necessary to remedy the problem. Then, seek estimates from two or three foundation contractors or remodeling contractors. They may have multiple potential solutions and prices for completing the work.

Once you have completed the detective work and had the engineer's report and the repair estimates, gather all the purchase documents, your notes, the home inspection, condition report and any other facts. Ask an attorney to review the information and meet with you to render an opinion as to whether or not you have a chance of recovery. The attorney can advise you if there is recourse, the likelihood of recovery and which parties are the most culpable. Only then can all your questions be answered.

— Richard Montgomery is the author of "House Money — An Insider's Secrets to Saving Thousands When You Buy or Sell a Home." He is a real estate industry veteran who advocates industry reform and offers readers unbiased real estate advice. Find him at DearMonty.com.